The DFPI has issued guidance directed to financial institutions, lenders, and mortgage servicers in California whose customers may be experiencing financial hardship as a result of recent severe winter storms, flooding, and landslides. The Department recognizes the serious impact to borrowers in communities affected by these natural disasters and encourages lenders and servicers to work with these customers to meet their financial needs.

The Commissioner encourages financial institutions, lenders, and servicers to work constructively with their customers and propose solutions to meet their lending needs as the recovery continues. Such solutions may include offering payment accommodations, such as deferrals or extensions, and loan modifications to the rate or term. Prudent efforts to modify or restructure the terms of loans will not be criticized by examiners. This guidance does not modify any existing law or regulation.

Furthermore, the Commissioner acknowledges that some licensees may experience an increase in delinquent or nonperforming loans and troubled debt restructures as a result of the financial impact to borrowers cause by the severe storm activity. The Commissioner will consider such increases in adversely classified assets within the context of the state of emergency, and supervisory responses will be measured and appropriate. The Commissioner supports and will not criticize efforts to accommodate customers in a safe and sound manner.

On January 4, 2023, Governor Gavin Newsom proclaimed a state of emergency in California as a result of the winter storms. On January 9, 2023, President Joseph Biden, Jr., declared that an emergency exists in California.